Bills Introduced to Extend Renewable Energy Production Tax Credits

A chronic concern in the U.S. renewable energy industry has been the lack of a long term commitment by Congress to encourage renewable energy. Short term tax incentives leave little time to develop complex long term projects, and the political uncertainty over whether incentives will be renewed from one year to the next deters financing. For renewable biomass energy, there is an additional concern: the lack of incentive parity with other renewable energy production. Both issues are addressed in recent bills.

Nov. 2, Reps. Dave Reichert (R-WA) and Earl Blumenauer (D-OR) introduced the American Renewable Energy Production Tax Credit Extension Act (H.R. 3307). According to the press release, “H.R. 3307 provides a clean, 4-year extension of the existing production tax credit for wind, biomass, geothermal, small irrigation, landfill gas, trash, and hydropower. It was created in the Energy Policy Act of 1992 and has frequently been extended in year-end packages of expiring tax provisions, as well as in the Energy Policy Act of 2005. The current incentive is set to expire next year for wind and in 2013 for other renewable energy forms. Advocates note that historically, at least six to eight months before the tax credit expires, financial lenders hesitate in providing capital for projects because of the uncertainty created by the pending expiration of the credit, stalling projects from coming online. The rush to complete projects as the PTC nears expiration also reduces projects and adds costs, resulting in higher electricity prices.”

Earlier this year, Rep. Wally Herger (R-CA) introduced the Renewable Energy Parity Act (H.R. 2286). This bill would increase the value of the production tax credit for hydropower, marine and hydrokinetic, small irrigation power, open-loop biomass, and municipal solid waste (including landfill gas) from 1.1 cents per kilowatt-hour to 2.2 cents per kilowatt-hour, ensuring parity between these technologies and wind, geothermal, and closed-loop biomass.